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What would it cost to break your mortgage?
In Canada, breaking a mortgage before the end of its term usually costs a prepayment penalty. This tool estimates the two common formulas so you know what to ask your lender.
From your statement
Ask your lender. Some use posted rates, which can make the penalty much larger.
Enter your rate (and, for a fixed rate, the lender's current rate for the time left) to see the estimate.
How this tool works
- Usually the higher of three months' interest or the interest rate differential (IRD) for fixed rates (FCAC); commonly three months' interest for variable rates (general practice; your contract governs).
- Simplified IRD = balance × (your rate − the lender's current rate for the time left) × years left.
- Many lenders calculate the IRD with posted rates and the discount you received, which can make it much larger than this estimate. Your contract and the lender's written payout statement decide.
- Worked example: $400,000 at 5% with 24 months left, lender's current rate for 2 years 4%. Three months' interest = $400,000 × 5% × 3/12 = $5,000. Simplified IRD = $400,000 × (5% − 4%) × 2 = $8,000. A fixed-rate penalty would usually be the higher: $8,000. (Illustrative rates, not quotes.)
- Interest Act, s.10: on a mortgage with a term longer than five years, once five years have passed you can pay it off with no more than three months' interest. It doesn't apply to mortgages given by a corporation.
Rules checked 2026-10-23. Estimates only, not an offer or advice; a licensed broker confirms the numbers and every mortgage is subject to lender approval. Everything is calculated in your browser. The amounts you type are never sent to us.
Read next: Understand your refinance terms
Questions about the penalty estimator tool
How do I get the exact penalty?
Ask your lender for a written payout statement for a specific date. Lenders must explain how they calculated the charge.
Is there a penalty at the end of my term?
No. At maturity you can pay off, renew or switch lenders without a prepayment penalty, though discharge and legal costs can apply.
Can I reduce the penalty?
Sometimes: use your annual prepayment privilege first, port the mortgage to a new home, or ask your lender about a blend-and-extend. We look at these before you decide.
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